Sounds like something from The Apprentice, but applying flame to a rug is not entirely uncommon as seen in samad's Film "Colors of India."
After a rug is created, loose wool is sometimes torched off the back of a rug to make the knots appear cleaner and crisper. Use of a torch to clarify the reverse side of a rug must be done with extreme care and caution, as wool can become excessively dried out very quickly, and perhaps be subject to permanent damage.
However, the manner in which it's done in this video is somewhat more unorthodox. It appears as though the rug below is actually a hand tufted rug which is receiving flame application to the face of the carpet to give an aged look to soon be washed. As opposed to "sharpening" clarity on the back, torching the front of a rug will decrease the pile height, vary the pile height, and change the overall color tones to mimic an older, antique rug.
There are many techniques used to make a rug look aged including tea/herb/golden washes. Some manufacturers have even gone to the extent of leaving rugs out in streets to be subjected to heavy road and vehicle traffic!